The Union Budget for the financial year 2021-2022 was presented by our Finance Minister Smt. Nirmala Sitharaman on 1st February, 2021 in the Parliament. Thich is the first budget of this new decade and also first ever digital budget in the backdrop of unprecedented COVID-19 crisis. Laying down the foundation of Atmanirbhar Bharat, this year’s Union Budget has been based on 6 pillars namely:
– Health and Well being,
– Physical and Financial
– Capital and Infrastructure,
– Inclusive Development for Aspirational India,
– Reinvigorating Human Capital,
– Innovation and R&D, and
– Minimum Government, Maximum Governance.
Various proposals to Direct Tax and Indirect Tax were also made. The list of 11 major Indirect Tax proposals are as follows:
1. Custom Duty Rationalization by reviewing old exemptions
Through this budget, more than 400 old exemptions are proposed to be reviewed this year.A through extensive consultations shall be done, and from 1st October 2021, a revised customs duty structure, free of distortions shall be notifies. Further, any new customs duty exemption henceforth, will have validity up to the 31st March following two years from the date of its issue.
2. Increase in duty of Electronics and Mobiles
For greater domestic value addition, a few exemptions on parts of chargers and sub-parts of mobiles have been proposed to be withdrawn. Further, some parts of mobiles will move from ‘nil’ rate to a moderate rate of 2.5%
3. Reduced custom duty on Iron and Steel
MSMEs and other user industries have been severely hit by a recent sharp rise in iron and steel prices. Therefore, reduction in Customs duty have been proposed at the rate of 7.5% on semis, flat, and long products of non-alloy, alloy, and stainless steels. Also, to provide relief to metal re-cyclers, mostly MSMEs, duty on steel scrap has been proposed to be exempted for a period up to 31st March, 2022.
4. Reduced custom duty on Copper
To provide relief to copper recyclers, the Union Budget of 2021 has proposed to reduce duty on copper scrap from 5% to 2.5%.
5. Reduced Custom Duty for Textile Industry
In order to to rationalise duties on raw material inputs for man-made textiles, the Budget proposed to bring nylon chain on a par with polyester and other man-made fibres by reducing the basic customs duty on caprolactam, nylon chips, nylon fibre and yarn to 5%.
6. Reduced Custom Duty on Chemicals
With a view to encourage domestic value addition and to remove inversions, apart from other items, customs duty on Naptha has been reduced to 2.5%
7. Reduced Custom Duty on Gold and Silver
The customs duty on gold and silver will be reduced from the exiting 12.5 per cent to 7.5 per cent. These items will also attract Agriculture Infrastructure and Development Cess at the rate of 2.5%. Therefore, Customs duty on gold and silver findings will be halved to 10% from the current 20%.
8. Increased duty on Solar panels
In order to encourage solar manufacturers, the Budget proposes to increase duty on solar inverters from current 5% to 20% and on solar lanterns from 5% to 15%.
9. Increased Custom Duty on Auto Parts
In this Budget of 2021-22, Finance Minister has proposed increase in customs duty of various parts including ignition wiring sets, safety glass and parts of signalling equipment to 15%.
10. Increased Custom Duty on Silk
With a view of providing benefits to the farmers, customs duty on cotton have been proposed to increase from nil to 10% and on raw silk and silk yarn from 10% to 15%.
11. Agriculture Infrastructure and Development Cess
There is an immediate need to improve agricultural infrastructure so that we produce more, while also conserving and processing agricultural output efficiently. This will ensure enhanced remuneration for our farmers. Therefore, this budget has proposed an Agriculture Infrastructure and Development Cess (AIDC) on a small number of items like Gold, Silver, Petrol and Diesel among others. While applying this cess, the Finance Minister has stated that care has been taken to not to put additional burden on consumers on most items.
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